Don't fall into this trap that could stop you from getting a mortgage.
Understanding what a mortgage lender is looking for can dramatically help you when trying to get a mortgage of your own. Read this article to make sure you are ready for those mortgage lender questions.
When we decide the time has come for us to buy a property, we all know we need to have some savings behind us. Purchasing a property is expensive, and you must have deposit funds to pay towards the purchase price. If you've been thinking about buying a property for a while, you might have been saving up for years to make the dream of owning a home of your own a reality.
It's a given that you will be funding the majority of your purchase with mortgage finance, for most buyers anyway, particularly if this is your first property purchase. But you might not be aware of some key issues that could scupper your plans. How awful would it be to have saved and sacrificed for years, only to find out at the final hurdle that you actually can't get the mortgage funds to buy the house?
So, it is essential to understand what a mortgage company is looking for when considering lending you money.
They want to know that:
- You are a real person.
- You have the funds available to make the monthly repayments.
- That the property they will be loaning money for is worth the amount you will pay for it.
Of course, the property is somewhat out of your hands because you might still be in the saving phase and have not yet found an actual property to buy. And, unless you are a surveyor, you might not be able to verify the value of the property or the condition. There is a real chance you could negotiate a price you feel happy to pay, and the evidence for a surveyor doesn't agree. This is also affected by the mortgage lender's criteria and your individual circumstances, so unfortunately, this is unknown.
However, you can ensure the other elements are in place to improve your chances.
Taking the first point, that a mortgage lender wants to check that you are a real person. It might sound strange, but this is a security check to ensure you are not fraudulently trying to loan thousands of pounds. You will be asked to provide your ID and evidence of your address history, and many of us, possibly without knowing it, leave a footprint online that can be traced to check that you are who you say you are. But, one of the simplest ways that a mortgage lender can do this is by checking the electoral roll. If you are still living with family and have never voted in the elections, you may not be registered on the electoral roll, which can work against you when trying to get a mortgage. It is free and straightforward to do online and will make the lender's job much easier when trying to verify who you are. This can go a long way to helping you get accepted for that mortgage.
Another thing you can do is have evidence of previous addresses. If you have moved around a lot, perhaps for university or work, then you might have had many addresses for the past three years. This isn't necessarily a negative thing, but it will help if you have proof of where you were living and when.
Finally, the affordability is a significant factor. The lender wants to know that if they loan you this money, you can pay it back. They need to know that you are more likely to be able to afford the repayments than not, assuming typical outgoings for a British household. If you have accounts and money all over the place, with payments here and there and dipping into your overdraft every month, your finances will seem chaotic. If you can control your spending and ensure your accounts look positive, you will have a much better chance of being accepted for a mortgage.
Buying a home is still a considerable undertaking, and with all of the fees and deposit funds involved, it can be costly, but it is worth it when you get those keys to a place you can finally call 'home'. By following these tips, you can drastically improve your chances of being accepted for a mortgage, and with just a little bit of preparation beforehand, you could be well on your way to your new home.
If you have any questions about buying a property or obtaining a mortgage, remember that you're not alone. Our property experts are here to support you and provide the guidance you need to get the ball rolling on your property purchase.